The coronavirus cost Disney’s theme park division $2.4 billion as Disneyland remains closed, cruise ships are docked and Disney World is open at a limited capacity, the company disclosed Thursday in its quarterly earnings report.
But looking ahead, executives expect the next few months to be busy in Orlando since about 77% of the park reservations are booked for the next quarter, including an almost completely full Thanksgiving holiday.
Disney CEO Bob Chapek said the reopening is going well enough for Disney World to raise occupancy from 25% to 35%, adding he believes it is still possible to maintain 6 feet of social distancing among visitors with the higher number of people allowed inside.
For the company, it’s a hopeful sign as Disney theme parks try to rebound from the global pandemic.
“We’re very pleased by how we have become adapt at operating under these constraints,” Chapek said during Thursday’s earnings call. He said Disney has a proven track record of running theme parks with new strict safety rules several months into the pandemic reopening.
The fourth-quarter revenue for the parks division, which includes cruise ships, resorts and merchandise, reached nearly $2.6 billion, almost triple from three months earlier when the attractions were closed because of the pandemic. However, looking back on a busy 2019 Labor Day holiday and summer season, the division generated nearly $6.7 billion in revenue.
Disney World as well as the open parks in Shanghai and Hong Kong each generated enough revenue for the quarter to cover their costs, Disney’s chief financial officer Christine McCarthy said.
Many challenges remain ahead in the theme parks division and the overall company as concerns over the pandemic remain and many areas in the country report a surge in cases.
The company doesn’t have an opening date for California’s Disneyland and doesn’t expect to open the park in 2020. Chapek said he was “extremely disappointed” California’s government hadn’t loosened restrictions for Disneyland.
And Disney Cruise Line is another part of the company slammed by the pandemic.
For cruises to sail again, the Centers for Disease Control and Prevention has “some really high hurdles,” Chapek said.
“The best news out of all that is that we now do see some light at the end of the tunnel,” Chapek said.
Believing there will be a pent-up demand for cruises, Chapek said the newest ship Disney Wish will launch in summer 2022 with others following behind in 2024 and 2025.
“We hope and expect that the world will be back to normal by then,” Chapek said.
On Thursday’s earnings call, Chapek pointed to Disney’s “bright spot” — the new streaming service, Disney Plus, that has more than 73 million subscribers, exceeding the company’s expectations. Last month the company announced a restructuring to prioritize streaming.
Overall, the company’s revenue dipped 23% to $14.7 billion in the quarter. Reuters reported the results beat Wall Street’s average estimate of about $14.2 billion, and Disney stock rose in after-hours trading.
Disney also announced Thursday it will not pay a stock dividend for the second half of fiscal 2020 because of the pandemic’s effect and the company’s investment into Disney Plus.
Chapek and other executives didn’t discuss the theme park’s mass layoffs that have hampered Central Florida.
In late September, Disney announced it was laying off 28,000 employees across the theme park division but didn’t offer further details on who was affected.
In the following days, as Disney negotiated with its unions and filed statewide notices for the mass layoffs, it was revealed that about 18,000 of those 28,000 employees losing their jobs were from Central Florida.
The struggles Disney is facing are not unique. Revenue at the Comcast-owned Universal theme parks fell 81% to $311 million for the quarter, the company disclosed late last month.